United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from...............to...............
Commission file number 0-16575
ENEX INCOME AND RETIREMENT FUND - SERIES 3, L.P.
(Exact name of small business issuer as specified in its charter)
New Jersey 76-0222818
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 200, Three Kingwood Place
Kingwood, Texas 77339
(Address of principal executive offices)
Issuer's telephone number (713) 358-8401
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ENEX INCOME AND RETIREMENT FUND - SERIES 3, L.P.
BALANCE SHEET
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MARCH 31,
ASSETS 1996
---------------------
(Unaudited)
CURRENT ASSETS:
Cash $ 2,346
Accounts receivable - oil & gas sales 24,273
---------------------
Total current assets 26,619
---------------------
OIL & GAS PROPERTIES
(Successful efforts accounting method) - Proved
mineral interests 1,325,118
Less accumulated depletion 1,147,756
---------------------
Property, net 177,362
---------------------
TOTAL $ 203,981
=====================
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 442
Payable to general partner 26,381
---------------------
Total current liabilities 26,823
NONCURRENT PAYABLE TO GENERAL PARTNER 52,762
---------------------
PARTNERS' CAPITAL:
Limited partners 119,410
General partner 4,986
---------------------
Total partners' capital 124,396
---------------------
TOTAL $ 203,981
=====================
See accompanying notes to financial statements.
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ENEX INCOME AND RETIREMENT FUND - SERIES 3, L.P.
STATEMENTS OF OPERATIONS
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(UNAUDITED) THREE MONTHS ENDED
----------------------------------------
MARCH 31, MARCH 31,
1996 1995
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REVENUES:
Oil and gas sales $ 28,398 $ 28,577
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EXPENSES:
Depletion 11,377 15,808
Impairment of property 52,602 -
Production taxes 1,260 957
General and administrative 8,495 10,369
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Total expenses 73,734 27,134
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NET INCOME (LOSS) $ (45,336) $ 1,443
=================== ===================
See accompanying notes to financial statements.
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ENEX INCOME AND RETIREMENT FUND - SERIES 3, L.P.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (45,336) $ 1,443
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depletion 11,377 15,808
Impairment of property 52,602 -
(Increase) decrease in:
Accounts receivable - oil & gas sales (11,112) 4,010
Increase (decrease) in:
Accounts payable (3,850) (2,909)
Payable to general partner (3,360) 861
Total adjustments 45,657 17,770
Net cash provided by operating activities 321 19,213
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions - (17,596)
NET INCREASE IN CASH 321 1,617
CASH AT BEGINNING OF YEAR 2,025 7,518
CASH AT END OF PERIOD $ 2,346 $ 9,135
See accompanying notes to financial statements.
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ENEX INCOME AND RETIREMENT FUND - SERIES 3, L.P.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. The interim financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of results for the interim periods.
2. The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which
requires certain assets to be reviewed for impairment whenever events or
circumstances indicate the carrying amount may not be recoverable. In the
first quarter of 1996, the Company recognized a non-cash impairment
provision of $52,602 for certain oil and gas properties due to market
indications that the carrying amounts were not fully recoverable.
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Item 2Management's Discussion and Analysis or Plan of Operation.
First Quarter 1996 Compared to First Quarter 1995
Oil and gas sales for the first quarter decreased from $28,577 in 1995 to
$28,398 in 1995. This represents a decrease of $179 (1%). Oil sales increased by
$1,303 or 29%. A 13% increase in oil production caused sales to increase by
$591. A 14% increase in average net oil prices increased sales by an additional
$712. Gas sales decreased by $1,482 or 6%. A 10% decrease in average net gas
prices reduced sales by $2,621. This decrease was partially offset by a 5%
increase in gas production. The increase in oil production was primarily the
result of the shut-in of production from the East Cameron acquisition in the
first quarter of 1995. The increase in gas production was primarily the result
of a successful workover on the Barnes Estate #2C in the first quarter of 1996.
The increase in the average oil net sales price was primarily due to higher
prices in the overall market for the sale of oil. The decrease in the average
net gas sales price was primarily due to workover expenses incurred on the
Barnes Estate acquisition, on which the Company receives a net profits royalty.
Depletion expense decreased from $15,808 in the first quarter of 1995 to $11,377
in the first quarter of 1996. This represents a decrease of $4,431 (28%). A 32%
decrease in the depletion rate reduced depletion expense by $5,347. This
decrease was partially offset by the changes in production, noted above. The
rate decrease was primarily due to the lower property basis resulting from the
recognition of a $52,602 property impairment.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long- Lived Assets to be Disposed Of," which requires
certain assets to be reviewed for impairment whenever events or circumstances
indicate the carrying amount may not be recoverable. In the first quarter of
1996, the Company recognized a non-cash impairment of $52,602 for certain oil
and gas properties due to market indications that the carrying amounts were not
fully recoverable.
General and administrative expenses decreased from $15,808 in the first quarter
of 1995 to $11,377 in the first quarter of 1996. This decrease of $4,431 (28%)
is primarily due to less staff time being required to manage the Company's
operations, partially offset by a $1,234 increase in direct expenses incurred by
the Company in 1996.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash flow from operations is a direct result of the amount of net
proceeds realized from the sale of oil and gas production. Accordingly, the
changes in cash flow from 1994 to 1995 are primarily due to the changes in oil
and gas sales described above. It is the general partner's intention to
distribute substantially all of the Company's available cash flow to the
Company's partners.
The Company will continue to recover its reserves and distribute to the limited
partners the net
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proceeds realized from the sale of oil and gas production after payment of its
debt obligations. Distribution amounts are subject to change if net revenues are
greater or less than expected. The general partner does not intend to accelerate
the repayment of the debt beyond the cash flow provided by operating activities.
Based upon current projected cash flows from its property, it does not appear
that the Company will have sufficient cash to pay its operating expenses, repay
its debt obligations and pay distributions in the near future.
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PART II. OTHER INFORMATION
Item 1. Legal proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits to this report.
(b) The Company filed no reports on Form 8-K
during the quarter ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENEX INCOME AND RETIREMENT
FUND - SERIES 3, L.P.
(Registrant)
By:ENEX RESOURCES CORPORATION
General Partner
By: /s/ R. E. Densford
R. E. Densford
Vice President, Secretary
Treasurer and Chief Financial
Officer
May 11, 1996 By: /s/ James A. Klein
-------------------
James A. Klein
Controller and Chief
Accounting Officer